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Sizing the UK ‘Jobs Gap’

The UK is more than 800,000 jobs short of the amount it would need to restore employment rates to those seen before the recession, a study from independent think tank the Resolution Foundation has found.

While the number of people in employment had climbed by 160,000 since 2008 to nearly 30 million, this positive news has masked the fact that the country’s adult population has grown faster over the same period – by 1.7 million.

Key findings

The UK’s recent employment performance would be strong in any context and in the context of flat GDP it is remarkable. Yet record levels of employment tell us little about the UK’s progress back towards a higher employment rate, the more important measure economically speaking. On the basis of the employment rate, the most comprehensive single measure of jobs market performance, the UK employment recovery still has a long way to run. The UK currently needs to close a jobs gap of 850,000 jobs before we are back to where we were in 2008. The scale of this challenge owes something to our ageing population, a strong headwind pushing against employment growth.

Even under optimistic scenarios, closing the jobs gap will take several years. Of course now, more than ever, there are deep uncertainties about the future pace of job creation. Yet against a baseline of the scenarios presented in this note, the risks are very much on the downside; none of the scenarios presented here could be called pessimistic and indeed, on current government projections, the jobs market is destined to fall well short of a recovery within the forecast period. More recent independent projections for public sector job losses are even more pessimistic. For all that the job market has outperformed expectations, the road back towards fuller employment still looks long and hard.